Jon Fletcher 2020-07-16

What factors affect CPM?

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  • Before publishers start to look to higher traffic or more ads, CPMs can be increased by changing the format, placement, and density of ads

  • Certain times, locations, and locations generate highers CPMs, so publishers can target high-value audiences for high-value CPMs

  • The more likely the ad is to get the user’s attention, the higher the CPM will be. But, publishers should be wary of letting ads dominate the page. Less is more. 


How much should a publisher earn from 1000 impressions? 


A standard CPM price seems like a simple question, but there’s no straight answer. 


That’s because unlike crude oil or pork bellies, where the product never changes and there’s a finite supply, advertising pricing is deeply flexible. Different ad spaces, formats, audiences, and content can suddenly make 1000 impressions much more valuable to certain advertisers. 


In this blog post, we’re going to cover what factors affect CPM, why advertisers value certain inventory more highly, and how publishers can maximize their earnings from every 1000 impressions. 


What is CPM and eCPM? 


CPM stands for Cost Per Mile—the cost advertisers will pay for 1000 impressions. eCPM is Effective Cost Per Mile—this is actual revenue earned, divided by 1000 impressions.

Because publishers can serve campaigns for multiple advertisers, all paying a different CPM, the eCPM allows publishers to see the average value of their impressions. Using eCPM helps advertisers understand how different types of campaigns affect their revenue. As advertisers can choose models based on more than just impressions, eCPM is used to understand the overall average value. 

  • CPM (cost per 1000 impressions) 
  • Active view CPM (cost per 1000 ‘viewable’ impressions) 
  • CPC (cost per click) 
  • CPE (cost per engagement)


By dividing the revenue from each type of campaign, publishers see the earning power of their placements and find ways to optimize this value for each campaign type, While campaign costs won’t always be decided by CPM, publishers can look to their eCPMs and then the factors they can control to make these 1000 visitors more valuable across the board. 
What factors affect CPM? 

Firstly there are factors that publishers may not be able to control but may be able to plan ahead for and set their prices accordingly.

Location

On average, the CPM rates tend to correlate fairly closely with the GDP of the country where the content is being served. Lower consumer spending power means that advertisers are less likely to bid for these impressions.


Similarly, rates vary depending on how advanced the online advertising industry is in the location. CPM rates also tend to be higher for English-speaking countries.


Date and time 

The date and time when your ads are scheduled to run will have a major impact on CPMs. Most publishers know there is lower demand in January as advertisers are still working out their budgets and campaigns. 


But, the effect on CPM can be just as pronounced on smaller time frames. Holidays, sporting events, Black Friday, anything that causes a spike in consumer spending will drive up CPMs for publishers. 


Device types

The more you know about a user, the more effective you can make your advertising. Despite mobile overtaking desktop in terms of traffic desktop CPMs are higher because they offer better conversion rates. At the mobile level, there are many ways device type can affect CPMs.

Advertisers may bid more for Apple impressions. The more expensive the phone, the more likely the user has disposable income. Online products also may only be available on certain devices, so advertisers will pay more to just reach their audience.


Factors publishers can control


In addition to audience profile, how ads are served can have a big impact on CPMs. 


Placements 

The more likely your ad is to be seen, the higher CPM it will demand. This means ads in the content-rich, center of the page ads and banners just after the fold command the highest CPMs. The darker areas on this screen map show which placements generate the highest CPM from Google Adsense.


As Marfeel tests close to 10 billion ad impressions every month, we have a set of tested best practices for ad placements. 

  • Keep ad density below 30% 
  • Place the first ad after 16 words if there is an image, and after 50 words if there are no media. 
  • Reduce placements towards the end of longer articles 
  • Add substantial content between Native Ads 
  • Disable ads placement before and after videos 
  • Disable ads placement inside HTML elements 

You can read our full guide to profitable ad placements here. 


Ad format 

The format of your ad determines where it can be placed and how it will be received. Often video ads can demand higher CPMs because they demand so much of the users’ attention. Publishers don't exactly want their readers to start watching a Budweiser video in the middle of their article so they demand a higher CPM. 



The animation on this ad format will help to capture the user’s attention for the second it takes to register a viewable impression and help increase the CTR. For these reasons, and the technology required to serve the ad, more complex formats can draw higher CPMs. 


Ad sizes 


The same goes for ad size. In a world where everyone is competing for fragments of attention, larger ad units command higher CPMs. There are also trends and fashions in ad sizing that can drive up CPMs for publishers. By looking at viewability, CTR, and clickthrough rates, the ad sizes that currently command the highest CPMs on mobile are: 

  • 720×90 (Leaderboard)
  • 300×600 (half page)
  • 320×100 (large mobile banner)
  • 300×250 (squares)




This square ad shape has grown in popularity. It dominates the screen yet doesn’t exceed the boundaries or overload the content. Fewer well placed, premium ads that command high CPMs are often more valuable than having more ads on the same page. 


Ad viewability

Ads are considered viewable when at least 50% of the ad’s pixels are in the viewport for at least a second. For this to happen, users need to be engaged with the page and not just scrolling through. Publishers with low ad viewability scores fail to command high CPMs. Ad networks know the value of this and offer campaigns where the advertiser only pays for verified, viewed impressions. Offering 100% viewability means a major bump in CPMs but it can take publishers a lot longer to register these impressions. 



Content-rich pages make users scroll slowly. Furthermore placing ads at the bottom of the first viewport means they will be visible for the entire time it takes a user to read a screen’s worth of content. 


With the where, when, and what of ads decided, publishers can then use the power of who to help increase CPMs even more. 


User data

The more advertisers know about the audience, the better chance they have of converting them. Either through cookies or first-party data, the more information your audience trails behind them, the higher CPMs you will be able to demand.


Show an advertiser that your audience has a deep interest in technology, has viewed content related to your product, and is in their target market and the CPMs will increase as advertisers compete with each other to reach this profile.


Context

But, with cookie data becoming more tightly bound by regulation and browser limitations, publishers are aiming to use the context of their content to make their placements more valuable to advertisers. Contextual keyword targeting selects keywords and scans website pages. A probabilistic algorithm will define and categorize the page. If the context matches the keywords, the advertisers are able to bid on the impression. 


Pinpointing ad spaces in content that speaks directly to a specific audience helps advertisers target and will increase CPMs. 
Publishers don’t need cookie data to know that a reader on a dog care article is likely going to be a pet owner. The CTR of contextual keyword advertisements is sound 2-3 times higher than ads placed in just the most relevant categories and this value is reflected in the CPMs. Here you can see an ad inserted into an article about the best tv. 




The ad is highly relevant to the audience and fits with the context, making a click much more likely. 


Stage of the buyer journey 

It’s rare for people to buy something online the first moment they see it. There’s no pressure so people feel comfortable weighing up the decision. It’s an old—and disputed—adage that consumers need to see a product 7 times before converting. 

This means users will check multiple sources, read reviews, weigh up professional opinion before converting. The further along the buying process the user is—like checking reviews—the higher CPMs advertisers will be willing to pay for impressions at this stage. 



Here you can see how the article gives advertisers impressions from a targeted audience at the point when they are showing buying intent. CPMs in this content will be far higher due to competition from relevant advertisers. 


Number of ad units

More is not always better. With fewer ad units, you offer the advertiser less competition for the user’s attention. Givenchy may not want their ads to appear in the same article as a flashy campaign for a type of bleach. Your product is more exclusive, more valuable. But the right number of ad units is a balance.


Reduce the number of ad units and you can drive up CPMs with a pleasingly unified experience— but you have few buyers. Test and experiment to find the optimum range between CPM and the number of ads. The best way to measure this is by using ARPU, the average revenue generated by each reader. This lets you see the effect of any change on your bottom line. 


Brand safety 

For advertisers, brand safety refers to two things: making sure their ads are not subject to ad fraud—either bot clicks or their content being replaced—and ensuring that their ads don’t appear next to unsavory content. According to Integral Ad Science, advertisers that don’t filter for fraud lose as much 22% of their impressions to invalid traffic. Then comes the issue of bad news. Brands don’t want their ads to sink in a sea of tragedy or squalor that can come with news content. 



To ensure brand safety, advertisers have started to offer higher rates for what is known as a Quality Cost Per Mille. QCPM counts only impressions that are viewable, brand-safe environments, and are frequency-capped to prevent them from displaying too often. This is a good example of how a low CPM does not always represent a good deal for advertisers. Offer more value and advertisers will be more likely to pay a higher CPM. 


Taking these factors into account, publishers can prioritize the highest CPM generating ad types and times. Fewer, higher quality, high-CPM ads will always be better for the reader experience and the publisher's revenue than a page crammed with low-value, low-quality ad placements.

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